NEW DELHI: Having incentivised job creation, the government is thinking of ways to encourage hiring of women and keeping them employed during their maternity period.

This follows instances of employers trying to cut costs by letting go female workers claiming maternity benefits after the leave period was increased to 26 weeks from 12 weeks.

The labour ministry proposes to reimburse employers the salaries paid for seven of the additional 14 weeks of maternity leave for female employees in the Rs 15,000 salary bracket who have been EPFO subscribers for 12 months, a senior government official told ET. This would cost the government Rs 400 crore annually.

The policy will start on a pilot basis in New Delhi and Maharashtra and scaled up across India later.

“Much on the lines of Pradhan Mantri Rojgar Protsahan Yojana, the labour ministry now plans to give fiscal incentives to employers to retain female workers availing 26 weeks of maternity leave,” the official told ET on condition of anonymity. The plan is for employers to bear half the salary payable for the additional 14 weeks of leave provided under the amended Maternity Benefit (Amendment) Act, 2017, effective since April 1, 2017.

According to the official, there have been several representations before the labour ministry on how the extended maternity leave has become a deterrent for female employees who are asked to quit or are retrenched on flimsy grounds before they go on maternity leave.

Labour ministry Santosh Kumar Gangwar chaired a meeting on Wednesday on incentives to help employers bear the extra financial burden and a policy in this regard is expected to be finalised soon.

The Maternity Benefit Act, 1961, protects the employment of women during their maternity leave and entitles them to benefits including full pay. The act is applicable to all establishments employing 10 or more people such as factories, mines, plantations, shops and other entities, as may be notified by the Central Government.

To be eligible for maternity benefits, awoman must have worked in an establishment for at least 80 days in the past 12 months. Payment during the leave period is based on the average daily wage for the period of actual absence.

According to a recent report by staffing company TeamLease Services, the enhanced maternity benefits will significantly hamper the entry of women into the workforce as employers are apprehensive about overheads such as maternity leave reimbursements and the cost of establishing post-maternity support infrastructure. Besides, the probability of employees availing of the benefit and not returning is a major concern.